Heat network operators, including universities, charities and NHS Trusts will be able to bid for a portion of £32 million in government funding.
Households connected to a heat network are believed to have a lower carbon footprint compared to those relying on individual, energy-intensive heating solutions.
The newly launched Heat Network Efficiency Scheme has opened for applications today.
The scheme aims to offer funding to support improvements to existing heat networks.
The cash will be spent on upgrading out-of-date equipment with energy-efficient alternatives such as replacement pumps, pipe insulation and underfloor heating controls.
Business and Energy Minister Lord Callanan said: “We’re investing in new heat networks, but it’s just as important to maintain and refurbish existing systems to ensure all customers can benefit from reduced energy use and household bills.”